How To Evaluate Credit Card Processing Merchant Services
There are many credit card processing services to choose from, each offering different features and fees. Choosing a company to process your customer’s credit card payments can be a daunting task. Sometimes you’ll experience difficulties both looking for a merchant account provider and then afterwards if you make the wrong selection!
Many banks will deny small business applications for merchant accounts because they don’t want to take the risk. Most small businesses end up going through third party providers who actually get the merchant account on your behalf. Afterwards they apply their own rate structure to your transactions.
If you operate an online business, you’ll need a shopping cart program of some kind- which must work with the system you use to process credit cards online. Unfortunately, if you go with a third party shopping cart rather than a custom written one it may not work with all credit card processing gateways. You need to be sure that the shopping cart program you use on your site works with the merchant account you end up using to process customer payments.
Accepting credit cards is not free! You pay the third party merchant account provider (or the bank if you are able to secure your own account directly with a bank that provides it) will charge you fees in exchange for the ability to accept credit card payments. The fees and rates you pay will vary depending on many factors.
How long you’ve been in business,
the type of business you operate,
your credit score,
how much of your sales are processed by phone versus online,
and the amount of credit card sales you process each month.
Some providers charge an annual fee in addition to a fee per transaction. Other providers only charge a percentage of each transaction processed. Typical rates for small businesses accepting phone and mail order payments are $0.10 to $0.30 plus 2 to 3% of the transaction amount. If the merchant account providers you are looking at want to charge over this percentage, be sure to check out a few others to see if you can get a lower rate before signing up. Sometimes, your credit rating will result in your having to pay higher fees. It’s worth shopping around a little to see if you can get a lower percentage rate per transaction.
When you’re shopping services looking for the best merchant account provider, make sure to compare all the fees to see how much you’re going to end up spending per each sale. You should also take into consideration what the application fee is, your annual fee, how much you must spend on equipment needed to set up your account, and whether you must maintain a monthly minimum of sales volume.
Also, compare how each merchant account provider allows you to withdraw your money. Can you do it whenever you want or do you have to do it at specific times of the month or year? How long will it take to receive your funds once you’ve requested a withdrawal or transfer of the money? How does the provider handle chargebacks?
Always read all the forms and contracts associated with merchant accounts before you sign anything. Understand the terms for cancellation and what conditions the provider can cancel your account, as well.
The process for applying for a merchant account varies depending on the company. You may need to provide a photo of your office (even if it’s in your home) to verify you are in the location you say that you are. Some services will want to send a representative to photograph your place of business. Sometimes, you’ll need to provide a DBA or business license, your tax returns and profit, and loss statements.